Engineer wants to reopen town's gold mine

GRASS VALLEY &#8212; Open the rusted door to an abandoned gold mine on the outskirts of this tourist-rich Sierra Nevada town and it's a 3,500-foot drop straight down and straight back to the days of California's Gold Rush.

This is where David Watkinson wants to start.

Watkinson is a mining engineer whose company wants to revive the historic Idaho-Maryland mine in Grass Valley, once one of California's biggest gold producers, but sealed shut for 52 years.

&quot;The best place to look for gold,&quot; Watkinson said, &quot;is an old gold mine.&quot;

That notion is spreading throughout the western United States, as prices for the precious metal pass $900 an ounce. From Nevada to Alaska, mining companies are dusting off mining maps and using computers to explore old tunnels in search of fresh scores. The price spike stems from growing worldwide demand for jewelry and a weakening U.S. dollar, which makes gold an appealing investment, said John Dobra, a gold researcher at the University of Nevada, Reno.

Also, with new mining technology, companies can reach gold once thought too hard to extract.

So far, the latest mini-Gold Rush has mostly bypassed California, in part because of the state's tough environmental rules, industry observers said. That could change this year: Several major mine expansions and reopenings are in the works, from the Mesquite Mine in Imperial County to Sutter Creek in Amador.

2.4 million ounces of gold

The Grass Valley proposal &#8212; put forth by Vancouver, British Columbia-based Emgold Mining Corp. &#8212; is among the most ambitious, and controversial. It's the only one in California calling for industrial-scale mining inside a growing city.

The population of Grass Valley at 11,000-plus has more than tripled since the mine was shuttered in 1956. Newcomers enjoy the Western boomtown look of its preserved downtown, and a quaint atmosphere they fear will be lost to an industrial mine.

Many here also don't want a mine to repeat the environmental mistakes of Grass Valley's past.

&quot;This isn't something you want to rush into blindly because you have fond memories of the gold mining days,&quot; said Jonathan Keehn, a board member of the Wolf Creek Community Alliance, so named for the creek abutting the mine project. &quot;The long-range implications of reopening an abandoned gold mine are pretty severe.&quot;

The Idaho-Maryland produced 2.4 million ounces of gold during its 100-year life, making it the second-most-productive underground mine in California history, behind the Empire Mine a few miles down the road.

Getting at it won't be easy

Watkinson said from 3 million to 5 million ounces remain, buried in quartz deposits within reach of the mine's 72 miles of underground tunnels.

Getting at it won't be easy. The company must first pump out millions of gallons of water that seeped into the shafts after the mine closed. The company's goal is to extract about 200,000 ounces of gold a year for 20 years, he said.

Last week, local officials held the first of several public meetings on the proposal. The City Council expects a vote in the fall.

With an environmental review not yet finished, several local conservation groups already have posted concerns about how the mine would affect nearby wells, a creek and traffic in the city. They're also asking if Emgold, a company that has never before run a mine, has the wherewithal to operate a major underground mine.

Grass Valley is well-acquainted with environmental risks that come with mining.

The creek running through Grass Valley's Memorial Park is contaminated with toxic debris from the Empire Mine, which closed in 1956 and is now a state park.

Federal officials declared Lava Cap mine just east of town a Superfund site in 1999 after a flood washed 20,000 yards of arsenic-laden mine tailings into a creek and turned it milk-white.

'Big challenges to overcome'

Watkinson said mining has become far more environmentally conscious since the 1950s, thanks to ever-tougher state restrictions. California law, for instance, requires Emgold to take out a reclamation bond to ensure cleanup of the site when the company leaves. Watkinson also touted the company's plan to build a ceramics plant near the mine, which would recycle mining's powdery, toxic byproduct &#8212; tailings &#8212; into sellable tile.

Mayor Mark Johnson, whose family has run a flower shop in town for 40 years, said he's &quot;cautiously optimistic&quot; about Emgold's proposal. He said the return of manufacturing jobs would help diversify the economy, which has grown reliant on tourist dollars.

&quot;They have some big challenges to overcome, especially when you look at the water issue, what they do with contaminated material and traffic,&quot; Johnson said, &quot;but mining is what made this a great town.&quot;